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Going local: a regional perspective on how trade affects labour markets and inequality

Author

Listed:
  • Elena Rusticelli
  • David Haugh
  • Axelle Arquie
  • Lilas Demmou

Abstract

The increase of emerging market economies in international trade and rapid rise in global trade intensity over the past three decades has been accompanied by growing, regionally concentrated, discontent with trade in advanced OECD countries. One of the main concerns is the negative effects of growing import competition on employment. This paper focuses on manufacturing sector employment because of its high trade exposure and potential for wider spillovers. It finds that while trade appears to have only a minor association with manufacturing employment shares at the national level compared with technology, trade has an important role in regional labour market developments due to the geographical concentration of industrial activities. The "sticky" nature of manufacturing employment and sometimes inefficient inter-regional migration mean that trade shocks to local manufacturing can affect entire regional labour markets, leading to widening regional inequalities. Policies should, in particular, focus on boosting regional resilience to industry related shocks, whether they come from trade or technology by building local capacity, both in terms of people – more educated labour is more mobile across jobs – and innovation.

Suggested Citation

  • Elena Rusticelli & David Haugh & Axelle Arquie & Lilas Demmou, 2018. "Going local: a regional perspective on how trade affects labour markets and inequality," OECD Economics Department Working Papers 1530, OECD Publishing.
    • Handle: RePEc:oec:ecoaaa:1530-en
    DOI: 10.1787/2981f94c-en
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    Cited by:

    1. Gergely Hudecz & Edmund Moshammer & Thomas Wieser, 2020. "Regional disparities in Europe: should we be concerned?," Discussion Papers 13, European Stability Mechanism, revised 25 Oct 2021.

    More about this item

    Keywords

    employment; inequality; labour market; manufacturing; regions; technology; trade; wages;
    All these keywords.

    JEL classification:

    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations

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